The National Association of Federally Insured Credit Unions (NAFCU) has requested that the Consumer Financial Protection Bureau (CFPB) rescind its rule regarding prepaid accounts, or at least exempt credit unions from it.
In October 2016, the CFPB finalized a regulation for prepaid products that offers protections like those for credit cards. Specifically, it requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, and give consumers access to account information. It also finalized “Know Before You Owe” disclosures for prepaid accounts to give consumers upfront information about fees and other details. The rule was set to take effect on April 1, 2018.
In June, the CFPB issued a proposal that would adjust the final rule’s requirements for resolving errors on unregistered accounts and provide greater flexibility for credit cards linked to digital wallets.
While NAFCU supports the bureau’s efforts to identify amendments aimed at alleviating regulatory burden, it believes the CFPB should rescind the rule entirely “to avoid the risk of disrupted service or loss of access to affordable prepaid products,” NAFCU Regulatory Affairs Counsel Andrew Morris said in a letter sent to the CFPB this week.
“The transition to new disclosures, new systems, and potentially new service agreements will correspond with significant costs and reduced availability of prepaid products,” Morris added. At the very least, this rule should not apply to credit unions, he said.
If the CFPB does go forward with it, Morris said the effective date of the final rule should be delayed one year to April 1, 2019 because these amendments will take time to implement.